Personal Credit History can be a mysterious concept. Most people understand that they have a credit score, but they might not know what it is for. This one piece of information would be very helpful in getting people on the right track, financially speaking. Top credit repair services can do it, and your own learning can help out enormously.
But before you get into the ways that credit scores can be improved, it’s important to talk about the financial behaviors that drive down a credit score. These are many, actually, but they’re all relatively easy to understand and control. Once you’ve mastered these, you’ll find that your credit score rises and that your financial future looks a lot more secure.
- Using Too Much Credit. Your credit score is supposed to show how responsible you are with money. If you have lots of credit cards, or carry tons of debt on the cards you have, this looks like you are overly-reliant on credit to live your life. Every credit card you have has a credit limit. This is the most money you are allowed to borrow at any time. When you use most of it, it looks like you’re trying to stretch your credit to the very limit. But if you use 30% or less of each card’s credit limit, you’ll look like you can control your life without relying on credit. It’s also important to limit your credit account number. If you have more than ten cards, try cancelling a few. Five to eight is a nice number (there’s no “right” number). Never cancel your oldest credit card, because this is the start of your credit history. For that, the longer the better.
- Not Paying Your Bills. This one is huge! If you can’t pay bills on time, or at all, how can you be trusted to borrow a bank’s money? Every time you pay a bill late or not at all, a record of the event is sent to the companies that keep track of this stuff. It says to them that you can’t be trusted to keep up with your most basic bills. If a company were to allow you to borrow money at all, they’d certainly charge you a lot of money for the privilege.
- Fiddling With Your Credit Too Much. We’ve all heard of “hard” and “soft” credit checks. These are the ones that you hear about when you’re looking for a mortgage loan or other big borrow. Credit checks are a hint that you’re looking for money. And this can make you seem financially insecure. If you need to apply for credit, do it infrequently, so you won’t look like you’re asking for money to survive every chance you get.
There are plenty of other behaviors that help or hinder your credit, but these are three of the most important. If you can control these, you’ll find that your credit improves over time and you’ll find it a lot cheaper to borrow money for the rest of your life.